Time to look at military personnel costs

In our troubled world, would you prefer that the United States had six more F-16 squadrons over the next year or pay the 1 percent annual cost-of-living adjustment for military retirees under age 62?

Last year the Obama administration proposed eliminating that 1 percent COLA raise — meant for retirees still able to work and before their Social Security kicks in — as a way to cut defense spending. It was approved in December as part of a bipartisan deal to reduce the deficit. In February, however, the House and Senate, pressured by veterans’ groups, reinstated the initial 1 percent increase for retirees.

This 1 percent decision became more real on July 17 when the Senate Appropriations Committee approved an additional $507.5 million in the fiscal 2015 Defense Appropriations bill to fund that 1 percent COLA for next year.

That amount, if used for some program other than the F-16s, could instead cover pay and allowances for about 5,000 U.S. troops. Or finance the operations of a carrier strike group in the Mediterranean for about two months. Or support 10 Army combat training center exercises. If the administration had gotten its way, the retirees would still have received a COLA increase — of 0.69 percent. Now, with the 1 percent restored, the increase will be 1.69. Now the country’s defense posture will have fewer resources.

Of course, the roughly $500 billion defense budget is so huge that the Senate panel found its own way to cover added money for the working-age retirees. In its report, the committee said there was about $762 million in unobligated funds from the prior year in military personnel accounts that would cover the increase.

The Congressional Budget Office has projected that if the initial 1 percent COLA increase for retirees under 62 is restored permanently, it would require an additional $3.5 billion over the next five years.

With attention focused on the demands caused by rapidly moving events in Iraq, Syria, Afghanistan and Ukraine, it is time for Congress — and the public — to stop turning down administration budget cut requests and begin thinking creatively about reshaping defense personnel costs.

Other recent proposals that Congress has rejected to save defense dollars such as raising retiree TRICARE and prescription drug fees have been just nibbling around the edges of military personnel costs — which involve about a third of the department’s budget.

That serious battle will begin Feb. 1, when recommendations to President Barack Obama are set to come from the Military Compensation and Retirement Modernization Commission. Established by Congress in February 2013, the nine-member commission has held public and private meetings, and last month issued a 358-page interim report that tries to describe the military pay and benefits programs.

Commission members looked at 65 special and incentive pay programs, more than 40 health benefit programs and 200 other distinct programs and benefits from eight federal agencies. The agencies also support military, veteran, retiree and family member quality of life. Some are self-sustaining, but others are costly — such as the $10.2 billion appropriated in fiscal 2013 for the Post-9/11 GI Bill, which has provisions to permit transfer of some or all unused benefits to a spouse or dependent children.

One focus of the commission may be on basic military pay. Its report noted that the services have and need to maintain “a far more professional and technologically fluent force.”

The strain of relocating every two or three years is also a growing problem for a changing military, which includes more women and married people with dependents. Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Assessments, has written about the strain on families. He and others have proposed recruiting skilled people at mid-career and starting them at higher ranks. That would reduce the need for others to have to relocate so often. The Marine Band already does this.

Another target is bound to be the ancient military retirement program in which if you make it to 20 years your payments start immediately, no matter what your age, but you get nothing if you leave or are forced out before that. Only 17 percent of service personnel make it to 20 years, and most often they are not the grunts who have done the fighting.

During fiscal 2013, $54.7 billion was paid to 2.28 million military retirees, including active, reserve, disabled and survivor recipients, according to the retirement panel. Past studies have suggested the retirement system has to change, to become more like private industry’s so there is some vesting shorter than 20 years and that an individual’s retirement program can be transportable when he or she leaves military service.

Big changes in the military personnel pay and benefits are needed for the incoming generation of military service volunteers. The questions remain whether the commission will propose the changes needed, whether Obama will send them to Capitol Hill and whether the next Congress will have the foresight to pass the reforms required.

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